Court appointed receiver and a privately appointed receiver
The role of the receiver differs according to the source of his/her appointment.
“To some extent the privately appointed receiver, particularly in current commercial practices, makes an effort to restore the financial prosperity of the company whose affairs he has been appointed to administer by a debenture holder. A Court appointed receiver, however, does not fill the same position. He is not so much what might be described as a company doctor, but rather his function is that of a company caretaker” per Street J in Duffy v Super Centre Development Corp Ltd (1967) 1 NSWR 382.
1. Court appointed receiver
A receiver appointed by the court is an officer of the court, not an officer of the company. Interference with the receiver is contempt of court. The court will exercise control over the appointed receiver. For example, if the receiver conducts his/her duties in a defective manner (arising out of a want of good faith or an erroneous approach to the law) the court will intervene. Mere dissatisfaction of the receiver will not justify the interference of the court.
The appointment of a receiver/manager by the court terminates the employment of the staff of the company. Thus a receiver appointed does not need to dismiss the staff of the company but he/she must re-employ the required staff.
2. A privately appointed receiver
For a privately appointed receiver, the receiver’s primary duty is to the debenture holders and not to the company. As receiver/manager with ancillary powers of management, he/she is not, however, a person appointed to manage the
company’s affairs for the benefit of the company.
A privately appointed receiver/manager is subject to the Act’s provisions relating to officers but a privately appointed receiver who is not also a manager, is not.
The date of appointment of a privately appointed receiver may not be as clearcut as that of the court appointee. A written appointment takes effect when the document is handed to the receiver by a person having authority to do so and the receiver accepts the proffered appointment.